JC Master Legal News Issue 977

Key Takeaways for This Issue
The General Office of the CPC Central Committee and the General Office of the State Council have issued the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law.”
Cracking down on securities‑related illegal activities is a crucial safeguard for upholding the order of the capital market and ensuring that it effectively fulfills its pivotal role. Since the 18th National Congress of the Communist Party of China, all relevant parties have earnestly implemented the decisions and arrangements of the CPC Central Committee and the State Council, steadily advanced the development of the capital market’s law‑enforcement and judicial system, and rigorously prosecuted violations in accordance with the law, thereby protecting the legitimate rights and interests of investors and achieving positive results. At the same time, against the backdrop of profound changes in the economic and financial environment and the ongoing deepening of capital market reform and opening‑up, illegal conduct in the capital market remains particularly pronounced, enforcement and judicial efforts face growing challenges, and related work confronts new circumstances and emerging difficulties.
The National Equities Exchange and Quotations Company held the launch ceremony for the “New Third Board Ten-Thousand-Mile Journey—Getting to Know Our Listed Companies” research initiative.
On July 9, 2021, the National Equities Exchange and Quotations Company held the launch ceremony for the “New Third Board Ten-Thousand-Mile Journey—Getting to Know Our Listed Companies” research initiative in Beijing. Li Yongchun, Member of the Party Committee and Deputy General Manager of the National Equities Exchange and Quotations Company; Ding Jianming, Member of the Party Committee and Deputy Editor-in-Chief of China Securities Journal; He Jun, Member of the Party Committee and Deputy Editor-in-Chief of Shanghai Securities News; and Tong Mu, Deputy General Manager of AllView Network, attended the ceremony and delivered remarks. Nearly 50 representatives from securities offices and investment institutions, along with journalists from news outlets including Xinhua News Agency, the Financial Times, and the Economic Information Daily, participated in the event on-site.

Strengthening Political Organs and Leading the Front Line—A Two-Year Record of the Tax System’s Study and Implementation of the Spirit of General Secretary Xi Jinping’s Important Speech on July 9
On July 9, 2019, General Secretary Xi Jinping delivered an important speech at the CPC Central and State Organs Party Building Work Conference, charting the course and providing fundamental guidance for advancing high-quality party building within these institutions. Over the past two years, the Party Committee of the State Taxation Administration has regarded studying and implementing the spirit of General Secretary Xi Jinping’s “July 9” important speech as a major political task. Under its leadership, the national tax system has steadfastly placed political development at the forefront, strengthened party building in organs to drive progress across the entire system, and leveraged party building to enhance business performance. As a result, the quality and standard of party building within the Administration and the broader tax system have been continuously elevated, providing a robust political guarantee for advancing tax modernization in the new era.
The State Council has clearly defined the basic institutional framework and supporting policies for affordable rental housing.
Recently, the General Office of the State Council issued the “Opinions on Accelerating the Development of Affordable Rental Housing” (hereinafter referred to as the “Opinions”), which sets out the basic institutional framework and supporting policies for affordable rental housing. The document stipulates that the government will provide policy support in areas such as land, fiscal and tax measures, and finance, while fully leveraging market mechanisms to encourage investment from multiple stakeholders and diversify supply channels. Given that fiscal, tax, and financial policies are crucial to addressing the question of “where the funding will come from” for developing affordable rental housing, the “Opinions” introduce a series of concrete, financially backed measures to provide robust support.

Finance & Capital Markets

The General Office of the CPC Central Committee and the General Office of the State Council have issued the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law.”
Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law,” and circulated a notice requiring all regions and departments to conscientiously implement these measures in light of their specific circumstances.
The main contents of the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law” are as follows.
Cracking down on securities‑related illegal activities is a crucial safeguard for maintaining order in the capital market and ensuring that it effectively fulfills its role as a key financial hub. Since the 18th National Congress of the Communist Party of China, all relevant parties have earnestly implemented the decisions and arrangements of the CPC Central Committee and the State Council, steadily advanced the development of the capital market’s law‑enforcement and judicial system, and rigorously prosecuted securities‑related violations in accordance with the law, thereby protecting the legitimate rights and interests of investors and achieving positive results. At the same time, against the backdrop of profound changes in the economic and financial environment and the ongoing deepening of capital market reform and opening up, illegal activities in the capital market remain particularly prominent, enforcement and judicial efforts face increasing challenges, and related work confronts new circumstances and new challenges. To further promote high‑quality development of the capital market, the following opinions are hereby put forward on strictly enforcing the law to combat securities‑related illegal activities.
I. General Requirements
(1) Guiding Principles. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will comprehensively implement the spirit of the 19th National Congress of the Communist Party of China and the Second, Third, Fourth, and Fifth Plenary Sessions of the 19th CPC Central Committee. We will adhere to the principles of marketization and rule of law, uphold the approach of establishing sound systems, refraining from unnecessary intervention, and maintaining zero tolerance for violations. We will strengthen the foundational institutional framework of the capital market, improve the mechanisms and systems for rigorously and lawfully cracking down on securities-related illegal activities, enhance the effectiveness of law enforcement and judicial proceedings, and effectively prevent and defuse major risks, thereby providing robust support for accelerating the development of a capital market that is standardized, transparent, open, dynamic, and resilient.
(II) Principles of Work
——Uphold the principle of zero tolerance. Strictly investigate and prosecute securities-related criminal and illegal cases in accordance with the law, intensify efforts to address major and high-profile cases, strengthen integrity-based constraints and penalties, and enhance the deterrent effect.
— Uphold the principle of the rule of law. Adhere to the principles of openness, fairness, and impartiality; ensure strict law enforcement and impartial administration of justice; standardize criteria and procedures; enhance professional competence; increase transparency; and continuously strengthen public trust.
— Uphold integrated coordination. Strengthen collaboration among securities and futures regulatory authorities, public security agencies, judicial bodies, market regulators, and relevant local authorities to forge a concerted effort for effectively cracking down on securities‑related illegal activities.
——Adhere to bottom-line thinking. Integrate the rigorous, law-based crackdown on securities-related illegal activities with effective risk prevention and resolution, as well as the safeguarding of national security and social stability; strengthen risk assessments in key areas; reinforce source‑level risk control; and vigilantly prevent risks from compounding, resonating, and escalating.
(III) Main Objectives. By 2022, significant progress will have been made in establishing a legal liability framework for illegal and criminal activities in the capital market; an enforcement and judicial system, along with a coordination and cooperation mechanism, for rigorously cracking down on securities‑related violations in accordance with the law will be preliminarily put in place; the costs of committing securities‑related offenses will be substantially increased; the recurrence of major illegal and criminal cases will be effectively curbed; channels for investors to seek redress will be further streamlined; and overall order in the capital market will be markedly improved. By 2025, the legal framework governing the capital market will be more scientific and comprehensive; China’s distinctive securities‑enforcement and judicial system will be further refined; the transparency, standardization, and public trustworthiness of securities‑related enforcement and judicial processes will be significantly enhanced; the linkage between administrative enforcement and criminal justice will be efficient and seamless; and a sound capital‑market ecosystem characterized by respect for the law, integrity, standardization, transparency, openness, and inclusiveness will be fully established.
II. Improving the Legal Liability System for Illegal and Criminal Activities in the Capital Market
(4) Improve the securities legislative mechanism. By making full use of legal amendments, statutory interpretations, and authorization decisions, enhance the efficiency of legislation in the securities field and ensure the timeliness of legal provisions.
(5) Strengthen criminal penalties. Implement the Eleventh Amendment to the Criminal Law, concurrently revise the criteria for initiating criminal investigations and prosecutions, and refine relevant criminal judicial interpretations and judicial policies.
(6) Improve the administrative legal system. Implement the newly revised Securities Law, and expedite the formulation and revision of supporting regulations and rules, including the Regulations on the Supervision and Administration of Listed Companies, the Regulations on the Supervision and Administration of Securities Offices, the Regulations on the Supervision and Administration of the New Third Board Market, and the Measures for the Implementation of Commitments by Parties in Administrative Enforcement in the Securities and Futures Fields, thereby substantially raising the costs of illegal and non-compliant conduct. Accelerate the enactment of the Futures Law to address gaps in the regulatory and enforcement framework for the futures market.
(7) Improve the civil compensation system. Expedite the implementation of the representative litigation regime for securities disputes. Amend the relevant judicial interpretations governing civil compensation arising from false statements, and abolish the prerequisite procedural requirements for filing such lawsuits. Launch a pilot program for an arbitration mechanism in the securities industry.
(8) Strengthen market‑based constraints. Advance reforms to the delisting regime, enhance delisting oversight, and rigorously enforce mandatory delisting procedures. Conduct research to refine regulatory frameworks and risk‑management mechanisms for companies that have already been delisted, and establish a sound mechanism that ensures the healthy cycle of survival of the fittest among listed companies. Intensify regulation over the issuance and operation of mutual funds; impose lawful market exit measures on fund managers found to have committed serious violations; effectively manage risks; and safeguard the legitimate rights and interests of fund investors. Further improve self‑regulatory systems—such as those operated by trading venues and industry associations—to address securities‑related violations and misconduct.
III. Establishing and improving the law-based, stringent enforcement and judicial mechanisms for combating securities-related illegal activities
(9) Establish a coordination mechanism for combating illegal activities in the capital market. Set up a Coordination Task Force to intensify efforts in handling major cases, improve information-sharing mechanisms, advance the formulation of key regulations, and coordinate the resolution of significant issues.
(10) Improve the investigative mechanisms and systems for securities-related cases. Further leverage the institutional advantages of the Ministry of Public Security’s Securities Crime Investigation Bureau, which is stationed at the China Securities Regulatory Commission, by refining administrative–criminal law enforcement coordination mechanisms in areas such as lead analysis, data sharing, intelligence‑driven investigations, and collaborative case handling. Additionally, optimize the allocation of personnel and resources within the Ministry of Public Security’s securities crime investigation framework and strengthen the capacity of frontline investigative teams.
(11) Improve the procuratorial system and mechanisms for securities-related cases. Based on factors such as case volume and staffing levels, study the establishment of specialized teams within the procuratorial organs to handle financial crimes. Explore the development of a mechanism for stationing prosecutors at the China Securities Regulatory Commission, strengthening coordination and cooperation among the Supreme People’s Procuratorate, the CSRC, and the Ministry of Public Security through participation in joint consultations and assessments of case leads and by conducting crime prevention activities. Enhance the professionalization of the procuratorial workforce in the securities sector. When cases involving serious crimes are transferred to public security organs, simultaneously forward copies to the procuratorial organs.
(12) Improve the judicial system and mechanisms for securities-related cases. Make full use of existing judicial resources, strengthen the capacity of financial courts in locations of securities trading venues such as Beijing and Shenzhen, and explore coordinated jurisdiction and adjudication of criminal, administrative, and civil cases in the securities and futures sectors. Deepen the professionalization reform of financial adjudication and enhance the professional development of the financial judiciary. Implement the hierarchical jurisdiction assigning first-instance trials of securities‑related crimes to intermediate people’s courts and their corresponding procuratorates. Intensify enforcement of administrative penalties and judicial judgments. Establish an expert advisory system and a specialized mechanism for qualified professionals to serve as people’s jurors.
(13) Strengthen the development of case-handling and trial‑base facilities. Establish specialized case‑handling and trial bases for securities‑related crimes within the public security organs, procuratorial organs, and judicial courts of certain prefecture‑level cities, including those where securities trading venues and futures exchanges are located. Increase the allocation of cases to these bases, with the corresponding procuratorates and people’s courts responsible for initiating public prosecution and conducting trials, respectively. Through mechanisms such as jurisdiction based on the place of the crime or designated jurisdiction, ensure that securities‑related criminal cases are appropriately centralized under unified jurisdiction in accordance with the law.
(14) Strengthen local jurisdictional responsibilities. Enhance information sharing and law enforcement cooperation between the China Securities Regulatory Commission and local governments and relevant departments; study the establishment of an internal notification system for major violations in the capital market to effectively prevent and curb resistance and interference—such as local protectionism—that may arise during investigations, thereby promoting the efficient handling of cases. While upholding the principle that financial regulation is primarily a central government responsibility, reinforce local authorities’ accountability for managing risks. Local governments should standardize all types of regional trading venues, crack down on illegal securities and futures activities in accordance with the law, and ensure effective prevention and resolution of financial risks within their jurisdictions, thus safeguarding social stability.
IV. Strengthening the Punishment of Major Securities-Related Criminal and Illegal Cases and Law Enforcement in Key Areas
(15) Strictly investigate and prosecute major and high‑profile cases in accordance with the law. Adhering to categorized supervision and targeted enforcement, we will comprehensively enhance the quality and efficiency of investigating and handling securities‑related violations of significant magnitude. We will rigorously, swiftly, and severely prosecute serious offenses such as fraudulent issuance, false statements, market manipulation, insider trading, trading on non‑public information, and the fabrication or dissemination of false information. With respect to egregious acts that harm the interests of listed companies—such as misappropriation of funds and unauthorized guarantees—we will conduct thorough, lawful investigations and pursue full recovery, while imposing time‑bound remedial measures. We will strengthen accountability for securities‑related violations committed by controlling shareholders, actual controllers, directors, supervisors, senior management, and other relevant persons. We will intensify oversight of intermediary institutions; where securities‑law violations are found, we will hold both the institutions and their practitioners strictly accountable in accordance with the law, and impose enhanced penalties on those who participate in or assist in financial fraud and other unlawful activities. We will accelerate the investigation, sanctioning, and referral processes for related cases. In addition, we will strictly regulate the application of suspended sentences in accordance with the law.
(16) Severely crack down on illegal securities activities in accordance with the law. Strengthen coordination and cooperation among market regulators, public security authorities, and the China Securities Regulatory Commission; improve inter‑departmental collaboration mechanisms; resolutely shut down illegal securities offices; thoroughly eliminate unauthorized securities business operations; and officely suppress illegal securities investment advisory services and related activities. Enhance monitoring of over-the-counter margin financing, and, in accordance with the law, take decisive action against large‑scale, systemic OTC margin‑financing schemes. Rigorously verify the legality of sources of funds used for securities investments and strictly control leverage ratios. Strengthen the linkage between administrative enforcement and judicial proceedings in cases involving local trading venues, thereby effectively guarding against regional financial risks.
(17) Strengthen unified enforcement in the bond market. Enhance coordinated enforcement against all types of illegal activities in the bond market, with a particular focus on cracking down on fraudulent bond issuances, falsification of information disclosures, and failure by intermediary institutions to exercise due diligence. Continuously refine the regulatory coordination mechanism for the bond market.
(18) Strengthen legal accountability for illegal activities in the private equity sector. Intensify criminal prosecution of such offenses as illegal fundraising, and the misappropriation or embezzlement of fund assets by private equity fund managers and their practitioners. Expedite the formulation of interim regulations on the administration of private investment funds, and implement differentiated regulatory measures and industry self‑regulation for venture capital offices and venture capital management companies.
V. Further Strengthen Cross-Border Regulatory, Law Enforcement, and Judicial Cooperation
(19) Strengthen cross-border regulatory cooperation. Improve relevant laws and regulations on data security, cross-border data flows, and the management of classified information. Expedite the revision of provisions governing the confidentiality and archival management of securities issuance and listing activities conducted overseas, thereby reinforcing the principal responsibility of overseas-listed companies for information security. Enhance the standardized management of mechanisms and procedures for the cross-border provision of information. Adhering to the principles of legality and reciprocity, further deepen cross-border audit‑regulatory cooperation. Explore effective approaches and modalities for strengthening international cooperation in securities enforcement, actively participate in global financial governance, and promote the establishment of an enforcement coalition to combat cross-border securities‑related illegal and criminal activities.
(20) Strengthen regulation of Chinese concept stocks. Take concrete measures to effectively manage risks and respond to emergencies involving these companies, and advance the development of a corresponding regulatory framework. Amend the State Council’s Special Provisions on the Overseas Raising of Shares and Listing by Joint-Stock Companies, clearly define the responsibilities of domestic industry authorities and regulatory agencies, and enhance inter‑departmental regulatory coordination.
(21) Establish and improve the system for the extraterritorial application of capital market laws. Expedite the formulation of judicial interpretations and supporting rules pertaining to the extraterritorial application provisions of the Securities Law, refine the specific conditions for such extraterritorial application, and clarify matters such as enforcement procedures and the evidentiary force of evidence. Strengthen adjudicatory work in capital market cases with foreign elements, and promote mutual recognition and enforcement of judicial judgments between China and foreign countries and regions.
VI. Striving to Enhance the Capacity and Professionalism of Securities Law Enforcement and Judicial Administration
(22) Strengthen securities enforcement capabilities. Enhance the capacity of securities enforcement, optimize the organizational structure of securities inspection and enforcement agencies, and advance the improvement of a Chinese‑style securities enforcement system and mechanism that meets the needs of capital market development. Fully leverage the role of the administrative enforcement commitment system for parties involved in securities and futures violations. Refine the reward system for reporting leads on securities law violations and bolster the development of platforms for receiving such reports.
(23) Enhance securities enforcement tools. Effectively leverage technologies such as big data, artificial intelligence, and blockchain to establish a monitoring and early-warning system for the securities and futures markets, develop a modern regulatory and enforcement model underpinned by technology, improve the efficiency of regulation and enforcement, strengthen the identification and early warning of serious compliance risks, and ensure effective prevention, timely detection, and precise crackdowns.
(24) Ensure strict law enforcement and impartial administration of justice. Officely uphold awareness of powers and responsibilities, evidence‑based decision‑making, and procedural compliance, and effectively enhance the professionalism, standardization, authority, and public trust in law enforcement and judicial processes. Strengthen unified law enforcement by establishing discretionary guidelines for administrative penalties to standardize enforcement practices. Leverage the roles of reconsideration oversight, litigation supervision, and procuratorial oversight, reinforce regulation and oversight of regulatory and law‑enforcement agencies, and resolutely rectify any irregularities in law enforcement and judicial work, thereby fostering a fair and just rule‑of‑law environment for the development of the capital market.
VII. Strengthening the Construction of a Credit System in the Capital Market
(25) Strengthen the institutional foundation for integrity-building in the capital market. Add dedicated provisions on integrity-building to relevant laws and regulations, establish a system of responsibilities for entities maintaining integrity records in the capital market, clearly define the integrity requirements, obligations, and liabilities of market participants, and implement, in accordance with the law, both penalties for breaches of integrity and incentives for upholding it.
(26) Establish and improve the credit commitment system. Develop an administrative licensing credit‑commitment regime for the capital market, clearly defining the scope of applicable entities and the types of licensing matters. Incorporate credit‑commitment obligations and their fulfillment into credit records, using them as a key basis for ongoing and post‑licensing supervision. For parties that seriously breach their commitments, revoke the relevant administrative licenses in accordance with the law.
(27) Strengthen integrity-based regulation of the capital market. Establish and improve a nationwide, unified integrity registry for the capital market, comprehensively recording the integrity-related information of all market participants. Enhance mechanisms for sharing integrity information, and intensify efforts to collect, query, and publicly disclose such information. Integrate relevant data into the National Credit Information Sharing Platform and the “Credit China” website, thereby fostering a collaborative framework for building and governing capital market integrity that involves all stakeholders.
VIII. Strengthening Organizational Support and Oversight with Accountability
(28) Strengthen organizational leadership. All regions and departments must attach great importance to law enforcement and judicial work in the capital market, earnestly align their thinking and actions with the decisions and arrangements of the CPC Central Committee and the State Council, clarify the division of responsibilities, enhance inter‑agency coordination, enforce accountability, and ensure that all tasks are effectively implemented.
(29) Strengthen public opinion guidance. Enhance media and public‑relations efforts to mount a multi‑pronged crackdown on securities‑related illegal activities, intensify law‑enforcement publicity for high‑profile cases across multiple channels and platforms, fully leverage the educational and deterrent effects of investigating and prosecuting landmark cases, send a clear zero‑tolerance signal to the market, and foster a sound capital‑market ecosystem characterized by respect for the law and trustworthiness.
(30) Strengthen oversight and accountability. Uphold the principle of exercising full and rigorous Party self‑discipline, and resolutely implement the requirements for deepening anti‑corruption efforts in the financial sector. Law enforcement and judicial organs, together with disciplinary inspection and supervision authorities, shall coordinate to advance risk resolution and anti‑corruption work in the financial field, rigorously investigating all forms of corruption underlying financial risks while also taking care to prevent such cases from triggering capital market risks. Priority shall be given to investigating cases that could impede major reforms of the capital market or give rise to systemic risks, as well as instances of collusion between regulatory officials and market participants, both inside and outside the system. In accordance with the law, the conduct of personnel of securities regulatory agencies who take up positions in enterprises or other profit‑making organizations directly related to their former duties shall be strictly regulated. Those who fail to enforce laws and regulations, fail to report leads, refuse to initiate investigations when evidence exists, conduct inadequate investigations, or otherwise obstruct or interfere with the proper handling of cases shall be held strictly accountable in accordance with Party rules, discipline, and the law.
Notice on the Issuance of the “Guidelines for Risk Control in Bond Pledge Repurchase Transaction Settlement of China Securities Depository & Clearing Corporation Limited, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange (2021 Revision)”
To further improve the risk management mechanism for trading and settlement in bond‑pledge repurchase transactions, protect investors’ interests, standardize the conduct of all market participants, and clarify the responsibilities of each party, in accordance with the Securities Law, the Measures for the Administration of the Issuance and Trading of Corporate Bonds, and other relevant laws and regulations, China Securities Depository & Clearing Corporation Limited, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange have jointly revised the “Guidance on Risk Control for Bond‑Pledge Repurchase Transactions of China Securities Depository & Clearing Corporation Limited, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange” (hereinafter referred to as the “Risk Control Guidance (2021 Revision)”). The revised guidance is hereby promulgated, and the following matters are hereby notified:
I. All participating institutions are requested to, in accordance with the relevant requirements of the “Risk Control Guidelines (2021 Revised Edition),” promptly complete the necessary business and technical preparations to ensure a smooth transition. At the same time, they should conduct thorough outreach and training for investors on the revised content and related changes introduced in the “Risk Control Guidelines (2021 Revised Edition).”
II. Legal persons and other organizations that, in violation of Article 8 of the Risk Control Guidelines (2021 Revision), engage in financing repurchase transactions using credit‑type bonds shall, within 24 months from the date of implementation of the Risk Control Guidelines (2021 Revision), promptly bring their operations into compliance with the relevant provisions; during this period, they shall refrain from increasing the scale of financing repurchases of credit bonds.
III. With respect to repurchase‑financing entities that do not comply with Article 16 of the Risk Control Guidelines (2021 Revision), they shall, within 24 months from the date of implementation of the Risk Control Guidelines (2021 Revision), promptly bring their operations into compliance. Until such compliance is achieved, these entities shall refrain from further increasing the face value of pledged securities held in the relevant issuer’s collateral pool.

The China Securities Regulatory Commission is cracking down hard on securities violations such as market manipulation and insider trading.
Market manipulation and insider trading severely undermine market order, impede the proper functioning of markets, and gravely infringe upon investors’ legitimate rights and interests. They constitute chronic, intractable problems that hinder the healthy development of the securities market and have long been priority targets for rigorous enforcement by the China Securities Regulatory Commission (CSRC). Since 2020, the CSRC has initiated investigations into 90 market-manipulation cases and 160 insider‑trading cases, accounting for 52% of all new cases opened during the same period. It has imposed administrative penalties in 176 market‑manipulation and insider‑trading matters, with total fines and confiscations exceeding RMB 5 billion. Additionally, the CSRC has referred 41 leads involving suspected market‑manipulation offenses and 123 leads involving suspected insider‑trading offenses to public security authorities—collectively representing 76% of all cases referred—and has transferred 330 suspects to the police.
Since 2020, the Commission has rigorously cracked down on market manipulation and insider trading, which have primarily manifested in the following ways: First, controlling shareholders of listed companies have formed collusive interest groups with market intermediaries and manipulative syndicates, engaging in inside–outside collusion to jointly “corner” and hype their own stocks. For example, Chen Mouming, the actual controller, in order to pledge his shares at a high price, instructed Xie Mou, then general manager of the listed company, Hu Mou, a market trader, and others to manipulate the stock price of Zhongchang Data, illegally profiting over RMB 11 million. Second, through continuous trading and other means, they have manipulated stocks with relatively small free‑float market capitalizations, maliciously “speculating on small, poor‑performing, and newly listed stocks,” causing sharp short‑term price surges and plunges. For instance, Jing Mou, the de facto controller of a private equity fund, abused leveraged trading to manipulate the stock of Rendong Holdings; after a sustained rally, the stock suddenly plummeted to its daily limit-down. Third, manipulative syndicates have exploited “black‑mouth” actors in the stock market to lure investors into buying stocks at inflated prices, while simultaneously selling off the same securities in reverse to reap illegal profits. For example, Zheng Mou and others manipulated the stock price of Jiamei Packaging; to quickly unload their holdings within a short period, they colluded with “black‑mouth” operators to use live‑streaming channels and WeChat groups to entice investors to buy en masse, then seized the opportunity to sell at elevated prices, pocketing tens of millions of yuan in illicit gains. Fourth, individuals with statutory access to material nonpublic information have abused their informational advantages to engage in insider trading—some making sudden purchases ahead of major announcements, others precisely reducing their positions before the release of negative news such as projected losses or goodwill impairments, and still others illegally disclosing insider information, leading to large-scale, interconnected cases. For example, Yan Moumou, the legal representative of an acquired company, used such information to conduct insider trading worth over RMB 17 million, reaping illegal profits exceeding RMB 3 million; meanwhile, independent directors of a listed company, including Hu Mou, leaked insider information within their social circles and among colleagues, passing it along through multiple layers, resulting in penalties for 11 individuals for insider trading.
Market manipulation and insider trading involve numerous actors, long illicit chains, and severe adverse consequences; moreover, the methods employed are often covert, leading to significant deception and misrepresentation of investors and substantial disruption of market order. Such conduct must be met with stringent punishment. In light of recent trends, in recent years, the CSRC’s inspection and enforcement authorities have strengthened targeted detection, institutional innovation, and administrative‑criminal coordination, while advancing the following initiatives: First, leveraging exchange‑based big‑data monitoring technologies, they have enhanced the comprehensive analysis and assessment of abnormal trading account information and illegal leads, thereby improving the precision of end‑to‑end enforcement. They have also intensified efforts to crack down on unlawful practices—such as manipulating markets under the guise of “market capitalization management.” Second, they have adopted a strategy of targeting those behind the scenes, dismantling organized networks, and disrupting criminal infrastructures, employing unified command, centralized deployment, and joint investigations to establish a coordinated, group‑oriented enforcement framework. Third, they have refined collaborative mechanisms with public security organs—including lead analysis, data sharing, intelligence‑driven investigation, and joint case handling—to continuously strengthen the crackdown on securities‑related crimes. Fourth, they have resolutely implemented the relevant provisions of the new Securities Law and Amendment XI to the Criminal Law, working to build a comprehensive, multi‑dimensional accountability system that integrates administrative, criminal, and civil liabilities.
Going forward, the China Securities Regulatory Commission will resolutely implement the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law,” issued by the CPC Central Committee and the State Council, and uphold the principle of zero tolerance. Grounded in the overarching regulatory framework of preventing and defusing financial risks and safeguarding investors’ legitimate rights and interests, the Commission will closely monitor market developments, track account‑linked activities, and scrutinize abnormal trading patterns. It will rigorously investigate and prosecute, in accordance with laws and regulations, such misconduct as market manipulation and insider trading, thereby continuously purifying the market environment and providing robust legal safeguards for the high‑quality development of the capital market.

Commercial & Corporate
The National Equities Exchange and Quotations Company held the launch ceremony for the “New Third Board Ten-Thousand-Mile Journey—Getting to Know Our Listed Companies” research initiative.
On July 9, 2021, the National Equities Exchange and Quotations Company held the launch ceremony for the “New Third Board Ten-Thousand-Mile Journey—Getting to Know Our Listed Companies” research initiative in Beijing. Li Yongchun, Member of the Party Committee and Deputy General Manager of the National Equities Exchange and Quotations Company; Ding Jianming, Member of the Party Committee and Deputy Editor-in-Chief of China Securities Journal; He Jun, Member of the Party Committee and Deputy Editor-in-Chief of Shanghai Securities News; and Tong Mu, Deputy General Manager of AllView Network, attended the ceremony and delivered remarks. Nearly 50 representatives from securities offices and investment institutions, along with journalists from news outlets including Xinhua News Agency, the Financial Times, and the Economic Information Daily, participated in the event on-site.
“The New Third Board Ten-Thousand-Mile Tour” is an important initiative of the National Equities Exchange and Quotations Company (NEEQ) to put its “service‑oriented” philosophy into practice, facilitate investment‑financing matchmaking, and enhance the quality and effectiveness of market services. It is also a distinctive, high‑impact brand event that the NEEQ is committed to developing. First, it provides investors and the general public with convenient, “zero‑distance” access to listed companies, thereby better safeguarding investors’ right to information. Second, it offers listed companies a platform to showcase their operations and corporate image from multiple perspectives, helping them strengthen their public‑relations management capabilities. Third, it establishes a venue for information exchange and face‑to‑face interaction between listed companies and investors, thus supporting investment‑financing connections in the market.
In his address, Deputy General Manager Li Yongchun stated that, as the primary platform for serving innovative, entrepreneurial, and growth‑oriented small and medium‑sized enterprises in the capital market, the New Third Board’s core responsibilities and mission are to connect the investment and financing sides and to foster a vibrant, two‑way flow of capital. Following comprehensive deepening reforms, the New Third Board has achieved a clearer positioning within the multi‑tiered market structure, with more distinctive market characteristics and institutional mechanisms better aligned with the needs of SMEs. Both the investment and financing sides have witnessed structural, trend‑driven improvements. On the financing side, the New Third Board has established a tiered development framework comprising the Basic Tier, the Innovation Tier, and the Select Tier. As of July 8, 2021, there were 7,466 listed companies, including 57 companies in the Select Tier—primarily leading offices in niche sectors and specialized enterprises—which have begun to exert a demonstrative and guiding effect; and 1,271 companies in the Innovation Tier, where the reform has further enhanced its appeal to high‑quality enterprises. Since the launch of the reforms, total market‑wide fundraising has risen steadily. On the investment side, trading volume continued to expand in the first half of this year. Since the reforms, the number of qualified investors in the New Third Board has grown significantly, and investor interest in entering the market has increased. Professional institutions have entered the market, QFII participation in private placements by listed companies has been implemented, and the first batch of public funds investing in the New Third Board have delivered average returns exceeding 30% within their first year. Deputy General Manager Li Yongchun emphasized that the 14th Five‑Year Plan calls for “deepening the reform of the New Third Board.” Under the leadership of the China Securities Regulatory Commission, the National Equities Exchange and Quotations Company will earnestly implement the directives of the CPC Central Committee and the State Council, further refine the market’s foundational systems, strengthen its role as a nurturing platform for small, specialized, and niche enterprises, focus on improving the quality of listed companies, enhance and refine market services, consolidate the market’s unique characteristics, and promote a dynamic, two‑way flow of investment and financing.
Deputy Editor-in-Chief Ding Jianming pointed out that, through continuous reform and innovation, the New Third Board has established a set of distinctive market mechanisms, providing robust support for the development of tens of thousands of innovative, entrepreneurial, and fast-growing small and medium-sized enterprises. Launching the “New Third Board Ten-Thousand-Mile Survey” to showcase a selection of high-quality SMEs and share replicable, scalable best practices will help guide the broader SME community to play an active role within the dual-circulation framework. China Securities Journal will mobilize its top talent and resources to provide full support and coordination for the survey’s implementation. Deputy Editor-in-Chief He Jun stated that this “New Third Board Ten-Thousand-Mile Survey” marks several firsts: it is the first time multiple mainstream capital-market media outlets have joined forces; the first attempt to employ integrated reporting approaches; and the first time a research team has been assembled, including both individual and institutional investors. Shanghai Securities News will leverage a variety of media channels to deliver integrated coverage, ensuring the smooth execution of the “New Third Board Ten-Thousand-Mile Survey” and contributing to the overarching goal of high-quality development in the capital markets. Deputy General Manager Tong Mu noted that, following the comprehensive deepening of reforms, listed companies on the New Third Board have experienced a marked increase in their sense of gain. In particular, with the launch of the Select Tier, a cohort of high‑quality, fast‑growing “small, specialized, exquisite, and unique” enterprises has gradually earned market recognition. Under these circumstances, conducting the “New Third Board Ten-Thousand-Mile Survey” is perfectly timed, offering a vital window for all stakeholders to better understand listed companies. Panorama Network will capitalize on its strengths to ensure the effective organization and comprehensive reporting of the survey.
In his address at the event, Liu Ping’an, Chairman of Jinchangchuan Capital, stated that listed companies, as public entities, can help investors better understand their value by transparently communicating their operational and developmental performance, while also enabling them to identify investors whose risk appetites align with their own. He expressed hope that more listed companies—particularly those on the Select Tier—would seize the “New Third Board Ten-Thousand-Mile Journey” research initiative as an opportunity to embark on a journey of value communication. Jinchangchuan Capital has demonstrated through theory, logic, and concrete actions that the New Third Board is a market for value investing—one that can indeed generate value for investors. In his remarks, Zhu Haibin of Anxin Securities noted that the New Third Board serves as a dedicated platform providing capital market services to small and medium-sized enterprises. It has played a pivotal role in helping these businesses and private offices broaden their financing channels, overcome growth bottlenecks, and achieve standardized development. The “New Third Board Ten-Thousand-Mile Journey” research program offers a valuable forum for all stakeholders to gain deeper insights into listed companies, enabling securities offices and research institutions to conduct more in-depth analyses of high-quality enterprises, while also allowing investment institutions to identify and capture the intrinsic value of such companies in a more timely and comprehensive manner.
This year’s “New Third Board Ten-Thousand-Mile Tour” research initiative is jointly organized by the National Equities Exchange and Quotations Company, China Securities Journal, Shanghai Securities News, and AllView Network. The surveyed companies are primarily from the Select Tier, with a select number also drawn from the Innovation Tier, totaling 32 offices and spanning regions including the Bohai Rim, the Yangtze River Delta, the Pearl River Delta, as well as Central China and Northwest China. Through a combination of roundtable discussions, project presentations, thematic salons, and media coverage, the initiative aims to highlight the story of the New Third Board and help all market participants deepen their understanding of this market.

21 Institutions Named: The CBIRC Discloses Risk Areas in Life Insurance Companies
On July 5, a notice issued by the China Banking and Insurance Regulatory Commission revealed that 21 life insurance companies, including Taikang Life, CITIC Prudential, Sunshine Life, and Ping An Pension, have encountered compliance‑related management issues. These problems encompass aggressive growth strategies, inadequate risk‑control mechanisms, and the persistent prevalence of market irregularities.
　According to disclosures, some life insurance companies continue to operate under a largely undisciplined business model, relying on incentive-driven strategies to achieve rapid growth in policy volume over the short term. Specifically, during the “strong start” period, PICC Health, Hezhong Life, and the Jilin Branch of China Post Life Insurance reported actual sales far exceeding their planned business targets; Agricultural Bank of China Life and the Ningbo Branch of Xintai Life both posted year-on-year premium growth rates exceeding 50% in the first quarter of 2021, with premiums already accounting for more than 70% of their full-year plans; the Tianjin Branch of Beijing Life Insurance’s variable‑term whole life insurance products exhibited risks such as inadequate coverage, treating long‑term policies as short‑term investments, and covertly functioning as wealth‑management products; meanwhile, the Yunnan Branch of Taikang Pension violated industry self‑regulatory commitments in its participation in long‑term care insurance bidding processes.
　Secondly, the risk‑prevention and control mechanisms remain inadequate. Specifically, Ping An Life has experienced a high frequency of complaints and reports nationwide, with operational risks stemming from sales misrepresentation becoming particularly pronounced and case‑related risks on the rise; CaiXin Life’s Hunan branch has been found to have engaged in practices—such as travel‑insurance products—that infringe upon consumers’ legitimate rights and interests; at Baonian Life’s Chongqing branch, staff accessed customers’ mobile phones, used WeChat official accounts to unilaterally apply for and misappropriate policy loans; at PICC Health’s Shanxi branch, employees improperly processed policy loans, thereby deceiving policyholders; at Ping An Pension’s Guizhou branch, personnel handling critical‑illness insurance schemes fraudulently obtained claim payments; Guohua Life and Ping An Pension reported their nationwide internet‑based business data to the Shanghai branch, leading to distorted business statistics; and at PICC Life, Taiping Life, and Taikang Life, risk‑identification and response mechanisms are insufficient, employee management is lax, and risk‑mitigation capabilities are inadequate.

In June, the automotive industry’s production and sales hit a slowdown—could chip shortages be to blame?

Automobile production and sales, which had been surging ahead, suddenly hit the brakes in June.
On July 9, the China Association of Automobile Manufacturers (hereinafter referred to as “CAAM”) released its latest production and sales data. In June, domestic automobile production and sales reached 1.943 million units and 2.015 million units, respectively, down 4.8% and 5.3% month-on-month, and 16.5% and 12.4% year-on-year.
In fact, in May of this year, domestic automobile production and sales already posted slight month-on-month and year-on-year declines, while June saw a further drop in both output and sales.
Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, stated that the decline in automobile production and sales in May and June was attributable to multiple factors. For passenger vehicles, the primary drivers were chip shortages and rising raw-material prices, while commercial vehicles were affected by the transition to new emission standards.
A senior executive at a publicly listed automaker told a Securities Times reporter that the impact of the chip shortage on vehicle production and sales persists. Since May, the company’s chairman has personally led teams to visit chip manufacturers to ensure an uninterrupted supply of automotive chips.
The decline has widened:
The chip shortage is the primary cause.
In 2020, amid the COVID‑19 pandemic, China’s automobile production and sales followed a pattern of low in the first half and high in the second half, with output and sales turning around starting in June. Benefiting from last year’s low base and the broad recovery of auto consumption, domestic vehicle production and sales have continued to rise this year.
However, starting in April, the high growth driven by the low base in the earlier period had noticeably weakened. By May, both month-on-month and year-on-year automobile production and sales in China posted slight declines, while in June, domestic auto output and sales experienced a more pronounced drop.
According to the latest data released by the China Association of Automobile Manufacturers, in June, automobile production and sales reached 1.943 million units and 2.015 million units, respectively, down 4.8% and 5.3% month-on-month, and down 16.5% and 12.4% year-on-year.
By vehicle segment, passenger car production and sales totaled 1.555 million and 1.569 million units, down 3.8% and 4.7% month-on-month, and 13.7% and 11.1% year-on-year; commercial vehicle production and sales reached 388,000 and 446,000 units, down 8.3% and 7.4% month-on-month, and 26.3% and 16.8% year-on-year.
“It is clear that the year-on-year decline in commercial vehicle production and sales has been greater than that of passenger vehicles,” said Chen Shihua. He added that the downturn in commercial vehicle output and sales is primarily attributable to the transition between China V and China VI emission standards, which has temporarily dampened market demand.
In fact, recent production and sales flash reports released by publicly listed automakers also underscore the reality that automobile sales slowed sharply in June.
On July 9, SAIC Motor (600104) disclosed its June production and sales figures. In June, the company sold 328,600 vehicles, a year-on-year decline of 31.46%. Specifically, SAIC Volkswagen sold 65,000 vehicles, down 54.63% year over year, while SAIC-GM sold 85,100 vehicles, a decrease of 34.97% compared with the same period last year.
Foton Motor (600166) also reported in its June production and sales flash report that the company’s vehicle output reached 57,700 units, down 11.72% year on year, while sales totaled 64,300 units, a 2.65% decline from the same period last year.
Industry insiders believe that the decline in commercial vehicle sales is attributable to policy factors, with effects that are both short-term and manageable. By contrast, the downturn in passenger car sales stems from a shortage of automotive chips—a challenge that is unlikely to be resolved quickly in the near term.
“The impact of the chip shortage on the industry has been brewing for some time, but through multiple layers of transmission, this pressure erupted in a concentrated burst in June.”
Cui Dongshu, secretary-general of the China Passenger Car Association (hereinafter referred to as “CAAM”), told a Securities Times reporter that recently, the shortage of automotive chips has disrupted the industry’s production rhythm. However, manufacturers have adopted differing strategies: some joint-venture brands are experiencing an imbalance between order demand and existing inventory, resulting in weaker retail sales, while domestic brands have maintained stable production and sales through more flexible approaches, bolstering their supply-chain advantages and, to some extent, mitigating the pressure from the chip shortage.
A senior executive at a publicly listed automaker told a Securities Times reporter that, since May, the company’s chairman has personally led a delegation to visit chip manufacturers in order to ensure an uninterrupted supply of automotive chips.
“To put it mildly, many Chinese automakers are lining up at the gates of chip suppliers, scrambling for available supplies,” said the source. The current chip shortage has prompted automakers to place greater emphasis on securing their supply chains; most companies are either working to stabilize their supply networks or engaging in joint development with chipmakers to ensure that chip production lead times align with automotive‑product timelines.
New energy vehicles continue to post strong growth.
Despite the shortage of automotive chips impacting production and sales across the industry, new-energy vehicles have continued to maintain their strong growth momentum.
According to data released by the China Association of Automobile Manufacturers, in June, China’s new-energy vehicle production and sales reached 248,000 units and 256,000 units, respectively. Sales hit a record high, with month-on-month increases of 14.3% and 17.7%, and year-on-year growth of 130% and 140%.
Recently, several new‑energy vehicle manufacturers have released their June sales figures. BYD reported 41,400 new‑energy vehicle sales in June, up 191.55% year over year from 14,200 in the same period last year. Great Wall Motor’s ORA brand sold 10,800 units in June, a year‑on‑year increase of 309.5%. In addition, SAIC-GM-Wuling, Tesla China, GAC Aion, and other automakers all exceeded 10,000 new‑energy vehicle sales in June, with 31,300, 28,100, and 10,400 units, respectively.
Among new EV manufacturers, in June, NIO delivered 8,083 vehicles, up 116.1% year over year; XPeng delivered 6,565 vehicles, a year-over-year increase of 617%; and Li Auto delivered 7,713 vehicles, up 320.6% from the same period last year.
According to relevant data, in June this year, the domestic retail penetration rate of new-energy vehicles reached 14%, while the cumulative penetration rate from January to June stood at 10.2%—a significant increase from 5.8% in 2020.
Cui Dongshu stated that, despite the chip shortage, the new‑energy vehicle market has continued to post robust growth for several key reasons. First, leading automakers, constrained by insufficient chip supplies and facing intense pressure from dual‑credit regulations for conventional vehicles, have seen their earlier scale advantages eroded. Under these circumstances, they are accelerating their transformation and strategic deployment in the NEV segment. Second, emerging EV startups, which operate on a smaller scale, have found it easier to secure chip allocations, enabling them to deliver results that have exceeded expectations.
Shanxi Securities notes that the trend of accelerating growth in new‑energy vehicles and a decelerating pace in the conventional‑fuel vehicle market will likely intensify going forward, with new‑energy vehicles expected to maintain robust growth in the second half of the year.
What do you think the year-long trend will look like?
The decline in automobile sales in June appears to have sounded an alarm across the industry: under the combined impact of the pandemic and other factors, the automotive market is unlikely to rebound in a straight‑line fashion.
Chen Shihua stated that, at present, factors such as rising raw-material costs and chip shortages are all likely to affect the automotive market’s trajectory, and a cautiously optimistic outlook for the full year remains warranted.
Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, believes that, for now, the chip shortage remains a supply-and-demand issue and has not yet extended to other areas. Consequently, its impact on automobile production and sales is expected to be short-lived—around 10% on first-half sales—but its effect on full-year sales is likely to be relatively limited.
“Although the current chip shortage is a supply‑side issue, it’s important to acknowledge that we have significant weaknesses in this area. Closing the gap in automotive chips could take at least two to three years,” said Xu Haidong.
In addition to the uncertainty that chip shortages have introduced to automobile production and sales, the recovery of consumer confidence is another critical factor. According to Cui Dongshu, this year’s PPI–CPI spread has reached a new record high, and the transmission of rising international commodity prices remains unresolved, continuing to squeeze corporate profits—particularly for small and medium-sized enterprises, which face even greater short-term operational pressures. This, in turn, makes it more difficult for middle- and low-income groups to see their incomes recover, posing significant challenges to the rebound in automotive purchasing power.
Although the growth rate of domestic automobile sales slowed in May and June, the industry as a whole remains highly optimistic about the full-year sales outlook, with particularly frequent upward revisions to sales forecasts for the new‑energy vehicle market.
According to the latest market forecast released by the China Association of Automobile Manufacturers, annual automobile sales in 2021 are expected to reach 27 million units, up 6.7% year on year. Passenger car sales are projected at 22.1 million units, a 9.5% increase compared with the previous year; commercial vehicle sales are forecast at 4.9 million units, down 4.5% year on year; and new-energy vehicle sales are expected to total 2.4 million units, representing a 76% year-on-year rise.
Notably, at the beginning of this year, the China Association of Automobile Manufacturers (CAAM) projected annual sales of 1.8 million new-energy vehicles. As the new‑energy vehicle market has remained robust, CAAM has repeatedly revised its outlook for this segment upward.
Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, told a Securities Times reporter that the growth in new‑energy vehicle sales is driven by demand. As battery reliability improves and vehicle safety is enhanced, an increasing number of consumers are embracing new‑energy vehicles—this is the fundamental factor propelling the market’s expansion.
“Our forecasts merely reflect the market’s prevailing sentiment,” emphasized Shi Jianhua. Overall, he noted that the current market recovery has far exceeded expectations, and advised the industry not to fixate on short-term fluctuations in vehicle production and sales figures, but rather to focus on the broader direction and long-term trends shaping the sector.
Taxation TAXATATION

Strengthen the political organs and lead the way as the vanguard.
— A Two-Year Record of the Tax System’s Study and Implementation of the Spirit of General Secretary Xi Jinping’s Important Speech on July 9

“To deepen the Party’s self‑discipline in all respects and carry out self‑revolution, we must start with the central and state organs and strengthen Party building within these institutions.” “The central and state organs constitute the vanguard in upholding the ‘Two Upholds.’”
With resolute determination and unwavering conviction, on July 9, 2019, General Secretary Xi Jinping delivered an important speech at the CPC Central and State Organs Party Building Work Conference, charting the course forward and providing fundamental guidance for advancing high-quality party building within these institutions.
Over the past two years, the Party Committee of the State Taxation Administration has regarded studying and implementing the spirit of General Secretary Xi Jinping’s important July 9th speech as a major political task. Under its leadership, the vast majority of Party members and cadres across the national tax system have steadfastly prioritized political development, strengthened both the central organs and the broader system, integrated Party building with business operations, and continuously enhanced the quality and standard of Party building within the Administration and the tax system, thereby providing a robust political guarantee for advancing tax modernization in the new era.

Repeatedly study and comprehend, and deeply appreciate the profound power of thought.

In July 2019, following General Secretary Xi Jinping’s important speech, Wang Jun, Party Secretary and Director of the State Taxation Administration, promptly organized a study session to convey and implement its key points, and convened a system-wide conference on advancing Party building to ensure thorough study and implementation. During the 2019 thematic education campaign on “Staying True to Our Original Aspiration and Keeping Our Mission Officely in Mind,” the Party Committee of the State Taxation Administration made the spirit of General Secretary Xi Jinping’s important speech a central component, holding specialized seminars for in-depth study. In 2020, in conjunction with efforts to strengthen political awareness within the tax administration, the Party Committee twice organized intensive study sessions for its theoretical study group. Since 2021, the Administration has continued to study and earnestly put into practice the principles learned through Party history education. On June 11, the Administration’s Party Committee held another special meeting to revisit, re‑examine, and deepen its understanding of the spirit of General Secretary Xi Jinping’s important July 9 speech, to review and summarize progress in its implementation, and to deliberate and deploy measures for the next phase of work.

Upholding political leadership, the concept of the “political organ” has taken deep root in people’s minds.

On July 9, 2019, General Secretary Xi Jinping put forward the important proposition that central and state organs must officely establish a sense of themselves as political bodies, and emphasized that taking the lead in upholding the “Two Upholds” is the primary task in strengthening Party building within these organs.
Over the past two years, the Party Committee of the State Taxation Administration has thoroughly implemented the spirit of General Secretary Xi Jinping’s important speeches, continuously strengthening both ideological and practical awareness in upholding the “Two Upholds.” It has consistently reinforced education on political consciousness, rigorously enforced political discipline and norms, and effectively carried out routine political oversight and assessments of the political environment, thereby powerfully advancing the sustained improvement of the tax system’s political ecosystem.
“Tax authorities are, first and foremost, political organs. Even as grassroots tax officials on the front lines, we must view issues from the standpoint of the Party and the people, employing a political lens and a office political stance to analyze and resolve tax-related matters. We must always hold high the Party’s banner, follow the Party’s direction, and act in accordance with the Party’s will, thereby playing our due role in advancing the cause of the Party and the country,” said Tang Yu, a grassroots tax official from Zhenyuan County in Qiandongnan Miao and Dong Autonomous Prefecture, Guizhou Province, on July 7, 2021, when reflecting on his understanding of the nature of political organs.

Strengthen ideological education and fortify the spirit with “calcium.”

Theory leads action, and thought serves as the banner of progress. Over the past century, the remarkable achievements of our Party have been made possible, first and foremost, by sound theoretical guidance and the direction of advanced ideas. Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era is Marxism for contemporary China and a powerful ideological weapon that enables the Party and the people to overcome all difficulties and obstacles.
The Party Committee of the State Taxation Administration has continuously promoted the study of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era among Party members and cadres at all levels within the tax system, emphasizing that they should set an example in thoroughly studying and implementing it, devote painstaking effort to truly understand, master, and apply the thought in practice, and thereby consolidate their faith, fortify their spiritual resolve, and maintain office ideological guidance.
— Uphold the practice of making the study of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era the “first item” on the agenda of Party committees at all levels of tax authorities. At each meeting of the State Taxation Administration’s Party Committee, priority is given to studying the spirit of General Secretary Xi Jinping’s important speeches and key instructions and directives, with such study institutionalized and accompanied by specific measures for implementation. Meanwhile, notices have been issued requiring Party committees at all levels of tax authorities to establish and enforce the “first‑item” system and to conduct regular supervisory inspections.
— We have consistently made the study of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era the “primary theme” of theoretical study sessions for Party committees at all levels within the tax authorities, as well as for all types of cadre education and training programs. Since 2019, the Party Committee of the State Taxation Administration has organized 15 training courses—covering topics such as the spirit of the Third, Fourth, and Fifth Plenary Sessions of the 19th CPC Central Committee and the study and implementation of Xi Jinping: The Governance of China, Volume III—for department- and bureau-level Party members and cadres across the tax system, providing refresher training to more than 3,200 participants. Meanwhile, the Party committees of provincial tax bureaus have likewise arranged comprehensive rotational training for all section-level cadres within their respective systems.
— We remain committed to making the study of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era the “top priority” in young cadres’ theoretical learning. At the General Administration level, 37 youth theoretical study groups have been established at the branch‑party level; meanwhile, tax bureaus at all levels have, in light of their specific circumstances, set up an additional 15,452 such groups, achieving full coverage of young cadres under the age of 40. Since the beginning of this year, more than 210,000 young cadres have participated in these study activities.
— We will continue to regard the thorough implementation of the important speeches, instructions, and directives of General Secretary Xi Jinping as our top priority. With respect to the key instructions and directives issued by General Secretary Xi Jinping on tax administration, we will ensure their resolute and swift execution, maintain a dedicated ledger to closely track each item, and conduct annual “follow-up reviews.”

Focus on strengthening the grassroots level and building robust fighting fortresses.

General Secretary Xi Jinping pointed out that only by consistently strengthening the grassroots level and laying a solid foundation, and by giving full play to the role of primary-level Party organizations as fighting fortresses and the exemplary and leading role of Party members, can Party building in government organs take root and yield tangible results.
The tax system comprises a large workforce, multiple administrative levels, and widespread geographic coverage; 90 percent of its cadres are stationed at the grassroots level, below the municipal and prefectural tax bureaus. The effective implementation of all tasks hinges on the grassroots, and the building of the workforce is centered there. Only when grassroots Party organizations are robust, well‑structured, and vibrant can tax‑related work be carried out efficiently, tax reform and development proceed steadily and sustainably, and taxpayers and payers achieve genuine satisfaction. Over the past two years, in accordance with General Secretary Xi Jinping’s important directive to “establish a clear orientation toward strengthening the grassroots,” the Party Committee of the State Taxation Administration has comprehensively extended Party building to the grassroots level. As a result, the political functions and organizational strength of grassroots Party organizations have been significantly enhanced, and the Party’s banner now flies high at the grassroots frontlines.
— Strengthening institutional capacity. At the State Taxation Administration, the secretaries of grassroots Party organizations are all held by principal officials of the relevant departments or bureaus, and discipline inspection committee members are, in principle, appointed from among Party members at the deputy department‑level. Following the 2018 institutional reform, tax bureaus at the provincial and municipal levels have each established Party‑building offices (sections), and the entire system has set up a total of 45,000 Party branches (general Party branches), with 22,000 full‑time Party affairs cadres assigned to these roles.
— Strengthening standardization to drive improvement. We have earnestly implemented the directives of the CPC Central Committee and the Party Building Work Committee of Central and State Organs on the standardized and normative development of Party branches, refining 24 specific indicators across six categories for the standardized and normative construction of primary-level Party organizations within the State Taxation Administration. We have rigorously overseen the implementation of each item, and to date, all 32 primary-level Party organizations have met the required standards. In addition, we have formulated the “National Tax System Guidelines for Party Building” and the “Guidelines for the Work of Primary-Level Party Organizations in the Tax System,” further advancing the standardization and normatization of Party building at the grassroots level.
— Striving for excellence and setting benchmarks. We have actively promoted the development of model government bodies, with the General Administration’s organs now largely establishing a distinctive brand for each party branch. In 2020, all provincial tax bureaus in the tax system that participated in local Party‑building assessments received an “Excellent” rating, while among city‑level and county‑level tax bureaus, the proportions achieving this rating were 94.27% and 85.93%, respectively.

Consistently upholding integrity and enforcing discipline, we rigorously and pragmatically forge an ironclad force.

To govern the country, we must first govern the Party; and to govern the Party, we must do so with strict discipline. General Secretary Xi Jinping has pointed out that the work style of central and state organs directly affects the image of the CPC Central Committee and the standing of the Party and the government among the people. Central and state organs must take the lead in upholding the Party’s glorious traditions and fine conduct, ensuring that the public can tangibly experience new changes and a fresh atmosphere.
Over the past two years, under the strong leadership of the Party Committee of the State Taxation Administration and with the oversight and guidance of the Discipline Inspection and Supervision Group of the Central Commission for Discipline Inspection and the National Supervisory Commission stationed at the State Taxation Administration, the national tax system has steadfastly upheld integrity, enforced discipline, and fought corruption. It has focused on establishing a new, “six-in-one” framework for comprehensively strengthening Party governance within the tax system—integrating political development, fulfilling dual responsibilities, consolidating comprehensive oversight, merging Party building with business operations, reinforcing both constraints and incentives, and ensuring seamless organizational alignment—thereby providing robust safeguards for the sustained, healthy development of the tax sector.
— The “two responsibilities” are being advanced in concert. The Party Committee of the State Taxation Administration officely supports the work of the Discipline Inspection and Supervision Group stationed at the Administration, conscientiously accepting and proactively cooperating with oversight. From the Administration down to the Party Committees of tax bureaus at all levels, regular communication and coordination mechanisms have been established with their respective discipline inspection bodies, effectively fostering synergy between the “two responsibilities.”
— Consistently improving work style. From 2019 to 2020, the State Taxation Administration rolled out, in three batches, 57 concrete measures aimed at addressing prominent issues of formalism and alleviating the burden on the grassroots level. This year, in response to 18 persistent problems of formalism within the tax system, an additional 60 measures were introduced, ensuring steady progress year after year and tangible benefits for frontline staff. At the same time, the “Doing Practical Things for Taxpayers and Payers and the Spring Breeze Action for Convenient Tax Services” was carried out in earnest, resulting in 100 initiatives across 10 areas to optimize tax and fee‑related services. In 2020, a special campaign targeting violations such as improperly accepting gifts and cash gifts, as well as the misuse of official vehicles for private purposes, was conducted in depth and received recognition from the relevant departments of the Central Commission for Discipline Inspection and the National Supervisory Commission.
— Strengthening oversight, disciplinary enforcement, and accountability. We have explored the establishment of an integrated, comprehensive oversight system that extends vertically throughout the tax administration and horizontally across all areas, which has now been rolled out across the entire system. We have issued a negative list of 135 items addressing violations of the spirit of the CPC Central Committee’s Eight‑Point Decision on Improving Party and Government Conduct, as well as an eight‑item positive list for official hospitality. We have deepened the application of the “four forms” of discipline, continued to implement the “dual investigation” mechanism for each case, and focused on rooting out misconduct and corruption at the grassroots level, thereby advancing in tandem the goals of ensuring that officials dare not be corrupt, cannot be corrupt, and do not want to be corrupt.
— Motivating cadres to take responsibility and deliver results. In 2019, 15 measures were introduced to encourage tax officials to step up and perform; in 2020, 24 exemplary role models were selected and featured in online briefings on the “Learning to Strengthen Taxation” platform. Over the past two years, a large number of outstanding cadres who excelled in tackling tough challenges have been promoted. At the same time, systems such as the “Implementation Measures for Tolerating and Correcting Errors in the Tax System” have been explored and formulated, further fostering a positive environment conducive to taking initiative and achieving success.

Unite powerful synergy; Party‑business integration leads reform and development.

General Secretary Xi Jinping pointed out that only by focusing on the central tasks, building strong teams, and serving the people, and by promoting the deep integration of Party building with professional work, can Party building in government organs effectively define its role and position.
Taxation is inextricably linked to both national economic development and the well-being of the people. Over the past two years, in the face of exceptionally arduous and demanding tasks in tax reform and development, the Party Committee of the State Taxation Administration has consistently emphasized the leading role of Party building, continuously promoting the integration and mutual reinforcement of Party building with business operations, thereby ensuring that tax work steadily advances in the right direction.
— Highlighting Party building leadership in major tax reforms. As we advance key reforms such as tax and fee reductions, personal income tax reform, and the digitalization of invoices, we ensure that wherever these reforms are implemented, the Party’s banner is held high. Prior to implementation, we integrate the role of Party building into the reform plans, motivating Party members and cadres to tackle tough challenges. During the reform process, we convene Party committee meetings to thoroughly deliberate on all critical issues; temporary Party organizations are established within each special task force and oversight group, and units tasked with specific reform initiatives form “Party Member Vanguard Teams.” Upon completion, we emphasize identifying and promoting exemplary models that have emerged during the reforms, and organize touring reports to serve as benchmarks and set a leading example.
— Establishing a mechanism for integrating Party building with business operations in daily work. By the end of 2019, 18 measures were formulated to promote the deep integration of Party building and business functions; in 2020, these measures were further refined in accordance with the guidelines issued by the Party Committee of State Organs on addressing the “two sets of books” problem. At the same time, a coordinated evaluation mechanism was piloted: civil servants whose principal leaders at all levels fail to achieve an “excellent” rating in their annual reports, evaluations, and assessments of Party building shall not be rated as “excellent” in their annual performance appraisals.
Over the past two years, the tax system has launched one reform after another and fought one tough battle after another. Under the leadership of Party building, the vast majority of tax officials have boldly tackled major challenges, overcome formidable obstacles, and seized critical opportunities, securing victory in one campaign after another and tackling one difficult issue after another.
In 2019, large-scale tax and fee reductions took root and yielded tangible results.
In 2020, the first annual individual income tax settlement was successfully completed; a series of tax and fee preferential policies supporting epidemic prevention and control as well as economic and social development were fully implemented; and “non-contact” tax filing and payment services have become the new norm.
In 2021, the CPC Central Committee and the State Council issued the “Opinions on Further Deepening Tax Collection and Administration Reform,” and related implementation measures have been steadily advanced. During the two-year special campaign to combat false invoicing and tax fraud, a total of 378,300 enterprises suspected of issuing false invoices and defrauding taxes were investigated and dealt with, and more than 5,000 criminal suspects voluntarily turned themselves in.
In the critical battle against the epidemic, the national tax system established more than 4,200 Party-member commando teams and volunteer service teams. A large number of Party members and cadres went deep into communities, towns, and villages to carry out patrols and on‑duty shifts, conduct screening and registration, and disseminate information on prevention and control, thereby fully leveraging the role of Party organizations as strong fortresses and contributing the tax sector’s strength to the overall effort to contain the pandemic.
On the front lines of poverty alleviation, the Party Committee of the State Taxation Administration has, through targeted deployments, inspections, and oversight tours, urged tax authorities at all levels to earnestly fulfill their political responsibilities in poverty reduction. Tax agencies at all levels have established paired‑up Party branches with 13,000 impoverished villages, and wave after wave of tax‑system officials and Party members have gone deep into these villages, working alongside villagers to pour their sweat into developing industries and pursuing sustainable development. As a result, they have helped 8,782 villages and 2.7 million people shake off poverty and embark on the path to moderate prosperity and shared wealth.

Strengthening Party building through vertical integration and horizontal coordination, and officely enforcing the political responsibility for governing and managing the Party.

Strengthening the Party’s political development is a long-term and arduous task. General Secretary Xi Jinping has pointed out that, in strengthening and improving the Party’s work within the central and state organs, we must grasp the “key link” of the responsibility system.
Following the reform of the tax administration, the tax system operates under a management framework characterized by dual leadership—primarily by the State Taxation Administration, with concurrent oversight from the Party committees and governments of provinces, autonomous regions, and municipalities directly under the central government. Over the past two years, in order to thoroughly implement General Secretary Xi Jinping’s important instructions on fulfilling principal responsibility and improving the mechanisms for Party building, the Party Committee of the State Taxation Administration has continuously refined and strengthened the “vertical integration and horizontal coordination for robust Party building” institutional framework, effectively addressing the longstanding challenge faced by vertically managed departments: the dilemma of having to manage Party affairs on two fronts while operating within local jurisdictions.
— Continuously improving the mechanism for transmitting accountability. The Tax System’s Measures for Implementing the “Two Responsibilities” have been revised and refined on multiple occasions. In June this year, the Tax Party Building Cloud Platform was launched, enabling real-time, automated delivery of responsibility‑related tasks to all accountable entities. From the State Taxation Administration down to the Party committees of tax bureaus at all levels, annual hierarchical briefings are held, with principal officials of internal departments and secretaries of lower‑level tax bureau Party committees reporting on their party‑building work. A comprehensive working mechanism has been established and refined—“downward management at two levels, with deeper oversight at one level”—under which the State Taxation Administration takes primary responsibility for provincial tax bureaus and extends oversight to municipal tax bureaus; provincial tax bureaus oversee municipal tax bureaus and extend oversight to county tax bureaus; and municipal tax bureaus oversee county tax bureaus and extend oversight to tax sub‑bureaus (stations).
— Continuously improving the mechanism of coordinated collaboration between vertical and local authorities. Efforts are being made to establish mechanisms whereby the Party committees of higher-level tax authorities and the Party committees and their working departments in the jurisdictions of lower-level tax authorities engage in mutual notification of important developments, reciprocal exchange of key documents, and cross‑sharing of performance‑assessment results, thereby encouraging tax authorities at all levels to proactively seek guidance and support from local Party committees. According to incomplete statistics, from the end of 2020 through the first quarter of 2021, leading officials of the Party committees of provincial, municipal, and county tax authorities nationwide led teams on a total of 5,772 visits to local Party committees for work, providing briefings and reports; meanwhile, leading cadres of the relevant Party committees issued 1,536 written endorsements expressing approval. In addition, leaders of local Party and government bodies, as well as officials from the Organization Department, Publicity Department, and Commission for Discipline Inspection and Supervision, have repeatedly commended or issued favorable instructions regarding the Party‑building work of tax authorities across various regions.
— Continuously improving internal coordination mechanisms. Tax authorities at all levels have established a system of regular meetings for leading groups on Party building and collaborative working mechanisms among member units, achieving “seven integrations”: between Party building and disciplinary inspection, between organ‑level Party building and system‑wide Party building, between Party building and personnel management, between Party building and functional oversight, between Party building and education and training, between Party building and performance assessment, and between Party building and business operations. These measures ensure the efficient functioning of Party‑building work and the unified, steadfast assumption of Party‑building responsibilities.
Drawing on history to guide the future. “Our Party has remained vigorous and full of vitality after undergoing countless trials and tribulations, and a key reason for this is that we have consistently upheld the principle of exercising strict self‑governance over the Party and ensuring that the Party is governed with rigor in all respects.” In his important speech at the rally celebrating the 100th anniversary of the founding of the Communist Party of China, General Secretary Xi Jinping set forth crucial requirements for continuing to advance the new great project of Party building in the new era. Standing at a new historical starting point, tax authorities at all levels will bear in mind General Secretary Xi Jinping’s earnest instructions, take the Party’s political development as the overarching principle, carry forward the great spirit of Party building, and further strengthen Party building within the tax system in the new era, thereby contributing even greater tax‑related efforts to the comprehensive realization of a modern socialist country!

The Party Branch of the Discipline Inspection and Supervision Group stationed at the State Taxation Administration conducted a special study session.
Wu Haiying delivered a special Party lecture on the study and education of Party history.
To mark the 100th anniversary of the founding of the Communist Party of China and in accordance with arrangements for Party history study and education, the Party branch of the Discipline Inspection and Supervision Group of the Central Commission for Discipline Inspection and the National Supervisory Commission stationed at the State Taxation Administration recently convened its eighth plenary meeting of all Party members. Wu Haiying, head of the Discipline Inspection and Supervision Group and a member of the Party Committee of the State Taxation Administration, delivered a special Party‑history lecture focusing on the century‑long history of the Party, the history of discipline inspection and supervision, and the development of taxation under the leadership of the Party.
The special Party lecture, drawing on a century of Party history and the history of discipline inspection and supervision, systematically outlines the historical trajectory and evolution of tax-related thought, tax system reform, tax collection and administration, and tax institutions across four distinct periods: the New Democratic Revolution, the Socialist Revolution and Construction, the Reform and Opening-Up and the Building of Socialist Modernization, and the New Era of Socialism with Chinese Characteristics. It highlights that the century-long development of taxation under the leadership of the Party has yielded invaluable lessons—namely, upholding and strengthening the Party’s overall leadership over tax work, ensuring that tax policies align with and serve the broader priorities of the Party and the state, adhering to a fundamentally people-centered political stance, continuously advancing tax reform and innovation, and building a contingent of tax officials who are loyal, clean, and responsible. These insights provide a powerful source of strength for reinforcing stationed oversight within the tax system, promoting disciplinary inspection and supervision efforts, and ensuring the steady and sustained progress of tax reform and development in the new era.
The special Party lecture emphasized that, as an institution dispatched by the Central Commission for Discipline Inspection and the National Supervisory Commission, we must integrate and comprehensively grasp the century-long history of the Party, the history of discipline inspection and supervision, and the history of tax development under the leadership of the Party. Drawing on this century of struggle, we should deeply appreciate the power of truth, consciously shoulder the political responsibility of upholding the “Two Upholds,” and ensure the thorough and unwavering implementation of the CPC Central Committee’s major decisions and deployments. We must steadfastly uphold a people-centered political stance and safeguard the legitimate rights and interests of taxpayers and payers. We should unswervingly deepen efforts to address both symptoms and root causes, continuously advancing the strategic goal of promoting integrity, preventing corruption, and ensuring accountability in a coordinated manner. Furthermore, we must resolutely push forward pilot reforms of the discipline inspection and supervision system, constantly enhancing the effectiveness of oversight and governance, and, through concrete actions and tangible results, fulfill the duties and missions entrusted to us by the CPC Central Committee and the Central Commission for Discipline Inspection and the National Supervisory Commission, thereby carrying forward the red lineage.
The special Party lecture report emphasized that, at present, disciplinary inspection bodies and cadres at all levels within the tax system must bear in mind the instructions of General Secretary Xi Jinping and the CPC Central Committee, and, in accordance with the requirements of the CPC Central Commission for Discipline Inspection, cultivate a political character of unwavering loyalty to the Party, uphold the ideological line of seeking truth from facts, and act as fighters who dare to struggle and are skilled at it. They must intensify efforts to exercise strict oversight and self‑purification, consciously define their roles and assume responsibilities in the “two revolutions” of the new era, and remain steadfast in their original aspiration to safeguard the leadership of the Party and the authority of the CPC Central Committee, in their mission to ensure the implementation of the Party’s guidelines, policies, and principles, in their duty to maintain the health of the Party as an organism, and in their task of translating institutional strengths into effective governance. In doing so, they should serve as loyal guardians and valiant fighters for the Party and the people, fully playing their role in supervising, ensuring implementation, and promoting improvement and development within the broader context of modernization.

China’s Market Entities Exhibit Vibrant Dynamism, as Evidenced by Tax Data
— Keynote Address at the Symposium on Fostering Market Entities and Optimizing the Business Environment
General Secretary Xi Jinping attaches great importance to fostering and unleashing the vitality of market entities and to improving the business environment. He has repeatedly emphasized that “market entities are the carriers of economic strength, and safeguarding them means safeguarding social productivity,” and has consistently called for “doing everything possible to protect market entities and build up the fundamental forces driving economic development.” Moreover, he has continuously issued major directives to refine a business environment that is market‑oriented, law‑based, and internationally competitive. Premier Li Keqiang has also repeatedly set clear requirements for nurturing market entities and has successively laid out concrete measures to advance the “delegation, regulation, and service” reforms at all levels of government and to optimize the business environment. During the 13th Five-Year Plan period, thanks to a series of reform initiatives and pro‑business policies introduced by the CPC Central Committee and the State Council, various types of market entities have emerged and flourished, creating a vibrant and thriving landscape. Next, I would like to share with you, using data on six groups of newly established tax‑related market entities, the enhanced vitality and robust growth of market entities during the 13th Five-Year Plan era. By “newly established tax‑related market entities,” we refer to enterprises, individual industrial and commercial households, and other market players that have completed registration with the market regulatory authorities and have, at the tax authorities, newly obtained tax type identification, applied for invoice issuance, and filed tax returns—activities involving tax matters. These entities constitute the most dynamic segment of the market, serving as a key force in invigorating the market economy and providing an essential foundation for sustaining economic development.
First set of data: The annual average number of newly established tax‑related market entities exceeds 10 million, effectively boosting entrepreneurial vitality. During the 13th Five-Year Plan period, China saw a total of 58.74 million new tax‑related market entities, averaging over 10 million per year—27.36 million more than in the 12th Five-Year Plan period, representing an 87.2% increase. As of the end of 2020, 47.52 million of these newly established entities remained in operation, with a survival rate exceeding 80%.
Second set of data: Among newly established tax‑related market entities, the share of productive service industries increased by 11.4 percentage points, reflecting a gradual optimization of the industrial structure. During the 13th Five-Year Plan period, the proportion of productive service‑sector entities among annual new tax‑related market entrants rose from 26.2% in 2016 to 37.6% in 2020. In particular, the share of new tax‑related market entities in sectors such as software and information services, business services, and professional technical services climbed from 11.2% to 16.9%.
Data from the third group show that the average annual revenue of newly established tax‑related market entities grew by 25.6%, with their operational scale expanding steadily. The average annual revenue per entity rose from RMB 1.014 million in 2016 to RMB 2.533 million in 2020, reflecting a compound annual growth rate of 25.6% and indicating that, during the 13th Five-Year Plan period, newly established tax‑related market entities continued to grow and expand their operations.
Data from the fourth group show that, in their first year of operation, nearly 50% of newly established tax‑related market entities file tax returns, and their operational vitality continues to strengthen. Tax filing indicates not only that these entities are engaged in actual production and business activities but also that they have achieved tangible results and generated measurable economic benefits. A higher tax‑filing rate reflects greater dynamism among market entities. From 2016 to 2020, the annual tax‑filing rates for newly established tax‑related market entities were 44.98%, 48.07%, 48.13%, 48.32%, and 45.74%, respectively. With the exception of a slight decline in 2020 due to the pandemic, the overall trend has been upward. Even as the VAT exemption threshold for small and micro enterprises was gradually raised from RMB 30,000 per month to RMB 100,000 per month—and further increased this year to RMB 150,000 per month—the tax‑filing rate has continued to grow, underscoring the sustained enhancement of operational vitality among newly established tax‑related market entities.
Fifth set of data: Newly established tax‑related market entities have collectively paid over 7.8 trillion yuan in taxes, providing a new impetus for tax revenue growth. The tax‑paying performance of these market entities to a certain extent reflects their production and operational capacity and vitality. During the 13th Five‑Year Plan period, tax revenues collected by the tax authorities increased by 18.5 trillion yuan compared with the 12th Five‑Year Plan period. At the same time, newly established tax‑related market entities cumulatively paid more than 7.8 trillion yuan in taxes, accounting for 42% of the total tax revenue increase between the two periods and becoming a key driver of tax growth.
Data from the sixth group show that, as of the end of 2020, newly established tax‑related market entities employed a total of 199 million people, providing strong support for employment stability. These new tax‑related market entities are the main force in stabilizing and expanding employment. Tax statistics reveal that, during the 13th Five-Year Plan period, the newly established tax‑related market entities collectively employed 199 million people by year‑end 2020, creating substantial job opportunities for new entrants while also offering ample room for existing workers to transition to new roles. Notably, among these newly established entities, private‑sector tax‑related market players accounted for 195 million employees at the end of 2020, representing 98% of the total.
The six sets of data above highlight the characteristics of China’s newly established tax‑related market entities during the 13th Five-Year Plan period: a large number, an optimized structure, rapid growth, strong vitality, and substantial contributions—underscoring the vigorous dynamism of emerging forces in economic development. At the same time, tax‑related data reveal that, over the same period, all tax‑paying market entities exhibited a favorable trend toward greater size, stronger performance, and improved quality. First, market entities have grown rapidly in scale. General VAT taxpayers are primarily those with annual taxable sales exceeding RMB 5 million and relatively stable operations. By the end of 2020, the number of such taxpayers nationwide reached 11.27 million, up 87.5% from 6.01 million at the beginning of 2016; roughly 70% of these were previously small‑scale taxpayers that have since expanded. Meanwhile, the number of enterprises with annual revenues exceeding RMB 1 billion increased from 16,289 at the start of 2016 to 21,272 by the end of 2020, a 30.6% rise over five years. Second, market entities have steadily strengthened. According to corporate income tax filings, the number of profitable enterprises rose from 5.53 million in 2016 to 8.35 million in 2020, an average annual increase of 10.9%. Among key tax‑paying enterprises with annual tax liabilities exceeding RMB 5 million, average total profits grew by 7.4% per year, while return on equity improved from 7% in 2016 to 9.05% in 2020, and the debt‑to‑asset ratio declined from 58.6% to 55%, indicating continuously enhanced profitability and risk resilience. Third, market entities have gradually improved in quality, as reflected in their innovation capacity. Over the past five years, a cumulative total of 1.27 million enterprise instances benefited from the preferential policy of additional deduction for R&D expenses, reporting R&D expenditures totaling RMB 7.5 trillion—increases of 6.3 times and 2.7 times, respectively, compared with the 12th Five-Year Plan period. From 2016 to 2020, the number of national high‑tech enterprises surged from 104,000 to 277,000, expanding at an average annual rate of 27.8%.
Under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, China’s market entities demonstrated remarkable resilience and vitality during the 13th Five-Year Plan period. This was made possible by a series of well‑designed, precise, timely, and effective reform measures and business‑friendly policies, as well as by the sustained efforts of governments at all levels and relevant departments to continuously improve the business environment. It also stemmed from the vigorous pioneering spirit of entrepreneurs—particularly the young entrepreneurial community—and the widespread promotion of the entrepreneurial ethos. Throughout this process, the tax authorities resolutely implemented the decisions and arrangements of the Party Central Committee and the State Council, integrating the delivery of tax and fee reduction policies with the deepening of tax administration reforms aimed at streamlining regulation, improving services, and optimizing the tax‑related business environment, thereby continually boosting the dynamism of market entities. On this occasion, I would also like to briefly share some of the tax authorities’ practical experiences.
We have consistently prioritized “reduction” as the overarching principle, helping market entities operate with a lighter burden. During the 13th Five-Year Plan period, we fully and faithfully implemented tax and fee reduction policies, with cumulative new tax and fee cuts exceeding RMB 7.6 trillion. At the same time, we adopted a comprehensive package of measures—streamlining approvals, simplifying procedures, and reducing documentation—resulting in a 93% reduction in tax administrative approval items, a 58% reduction in tax‑related certification requirements, and a 50% decrease in the submission of tax‑related documents. The average processing time for routine export tax rebates was shortened by 38%, and 95% of the certificates and supporting documents previously required to access tax incentives have been shifted from “filing” to “record‑keeping.” As a result, the tax and fee burden on market entities, as well as their institutional transaction costs, have been significantly reduced.
We have consistently prioritized service as the guiding principle, helping market entities thrive. For eight consecutive years, we have launched the “Spring Breeze Action for Convenient Tax Services,” introducing a total of 418 innovative measures across 49 categories. We have comprehensively normalized contactless tax filing and payment, with nearly 90% of tax-related matters and 99% of tax returns now handled online. Moreover, social security contributions previously collected by other agencies have, as of June this year, largely been made available through online and mobile platforms. At the same time, in collaboration with the China Banking and Insurance Regulatory Commission and financial institutions, we have promoted “tax‑bank‑interaction” initiatives to support the development of small and micro enterprises. During the 13th Five-Year Plan period, 5.95 million small and micro businesses nationwide secured bank loans totaling RMB 2.9 trillion through these programs, effectively easing their financing constraints.
We have consistently prioritized regulation as our primary approach, helping market entities develop in a standardized and orderly manner. We have established a new dynamic regulatory framework based on “credit + risk,” leveraging tax‑related big data for analysis, monitoring, and early warning, thereby enhancing the precision of risk response and encouraging taxpayers to pay taxes lawfully and with integrity. During the 13th Five‑Year Plan period, the number of taxpayers subject to risk‑based analysis and response declined by an average annual rate of 22.1%, while the average amount of additional taxes collected per case increased by 29.7% annually. The number of A‑rated taxpayers grew from 700,000 in 2016 to 1.72 million in 2020, nearly doubling. For emerging business forms and models in the economy, we have strengthened oversight alongside improved services. We have rigorously investigated and prosecuted, in accordance with the law, industries and sectors where tax evasion is particularly prevalent—especially with strong support from the Ministry of Public Security, the General Administration of Customs, and the People’s Bank of China—in joint special campaigns targeting illegal activities such as issuing false invoices and fraudulently obtaining tax refunds. From August 2018 to the end of June this year, we identified and dealt with 388,000 enterprises suspected of such offenses, recovering tax losses totaling RMB 87.08 billion, and prompting more than 5,000 suspects to turn themselves in, thus significantly advancing the creation of a fair and well‑regulated tax environment. As head of the tax authority, my guiding principle is to do everything possible to lower nominal tax rates, raise effective collection rates, and crack down on tax evasion and avoidance—never allowing “bad money” to drive out “good money.” I believe that lawfully combating tax evaders provides the strongest support and assistance to the vast majority of law‑abiding taxpayers, while also serving as the most powerful impetus for upholding the rule of law and fostering a fair, transparent tax environment—our best form of protection.
We are fully aware that the new experiences and renewed vitality the tax authorities have brought to market entities represent only a small, yet vital, stream in the broader landscape of fertile ground nurturing thriving businesses. We also recognize that there remain significant gaps and shortcomings in our work, and that many areas require us to learn earnestly from other departments and to secure support and understanding across all sectors. We hope that, as always, you will continue to show concern for and provide guidance on tax-related work. Moving forward, we will thoroughly study and implement the spirit of General Secretary Xi Jinping’s important speech at the rally celebrating the 100th anniversary of the founding of the Communist Party of China. We will resolutely follow the decisions and arrangements of the CPC Central Committee and the State Council, continuously deepen the reform of the tax administration system—streamlining administration, delegating power, improving regulation, and enhancing services—and spare no effort to invigorate market entities. In striving to build a business environment that is market‑oriented, law‑based, and internationally competitive, we will contribute even greater strength to high‑quality development.

Litigation & Arbitration

The State Council has clearly defined the basic institutional framework and supporting policies for affordable rental housing.

Recently, the General Office of the State Council issued the “Opinions on Accelerating the Development of Affordable Rental Housing” (hereinafter referred to as the “Opinions”), which sets out the basic institutional framework and supporting policies for affordable rental housing. The document stipulates that the government will provide policy support in areas such as land, fiscal and tax measures, and finance, while also emphasizing the need to fully leverage market mechanisms to encourage investment from multiple stakeholders and ensure a diversified supply. Given that fiscal, tax, and financial policies are crucial to addressing the question of “where the funding will come from” for developing affordable rental housing, the “Opinions” lay out a series of concrete, tangible measures to provide such support.
Fiscal and tax policies provide strong support.
“Housing is a major issue that directly affects people’s well-being, and we must intensify efforts to ensure adequate housing for urban residents facing difficulties,” said Li Xuhong, Director of the Institute of Fiscal and Tax Policies and Applications at the National Accounting Institute in Beijing. She noted that the “Opinions” provide robust policy support for affordable rental housing across land, fiscal, tax, and financial channels, helping to improve the supply‑demand balance in China’s housing rental market, promote the sound development of the affordable rental housing sector, and address urban housing challenges—particularly the housing difficulties faced by new urban residents and young people. In terms of fiscal and tax incentives, the document specifies that central government subsidies will be provided; through existing funding mechanisms, the central authorities will grant subsidies for eligible affordable rental housing projects.
“Given the uneven fiscal capacities across regions and the varying task objectives, the central government’s targets for developing affordable rental housing are backed by corresponding central fiscal resources. Relatively speaking, large cities have greater demand for such housing and also enjoy comparatively sound local finances, so the costs are typically shared between local and central authorities. In contrast, smaller and medium-sized cities have lower overall demand, but central support accounts for a larger share of total financial input,” said He Daixin, head of the Fiscal Research Office at the Institute of Financial Strategy of the Chinese Academy of Social Sciences. He Daixin further noted that, beyond securing construction funding on the supply side, tax and fee reductions represent the critical “last mile” in making affordable rental housing more attractive to tenants. “Because these initiatives involve non-residential properties and land use, new preferential policies are needed for related value-added tax and property tax liabilities.” In response, the Opinions stipulate reducing the tax and fee burden and leveraging a comprehensive array of tax and fee measures to bolster the development of affordable rental housing. Specifically, when non-residential existing land and buildings are used to construct such housing, once a project receives official certification as an affordable rental housing initiative, it will be eligible for tax incentives—such as reduced VAT and property tax rates—on par with those applicable to residential rentals. On June 18, the State Council Executive Meeting clarified that, effective October 1, housing‑rental enterprises leasing housing to individuals will be subject to the simplified tax calculation method, paying VAT at a rate of 1.5% instead of the standard 5%; meanwhile, enterprises, institutions, and other entities that rent housing to individuals or to professionally managed, large‑scale housing‑rental offices will see their property tax rate reduced to 4%.
“This means that housing‑rental enterprises renting to individuals will enjoy the same tax incentives as individual business households doing the same, demonstrating strong policy support for the housing‑rental sector,” said Li Xuhong. She added that a reduction in tax burdens will help motivate market players to actively participate in the development of affordable rental housing, thereby increasing the supply of such housing, unlocking the potential of existing housing stock, improving the structure of housing supply, and alleviating supply‑demand imbalances and mismatches in the rental market. The Opinions also stipulate that urban infrastructure配套 fees will be waived for affordable rental housing projects. “This provides an economic incentive for converting idle land and properties into affordable rental housing,” noted He Daixin.
Long-term loans continue to provide “blood transfusions.”
For entities that hold affordable rental housing for their own use, the Opinions explicitly state that banking and financial institutions are encouraged to provide long-term loans on a market‑based basis. As for housing‑rental enterprises, the document requires financial institutions to extend loans—under the principles of legality, compliance, controllable risks, and commercial sustainability—to those companies that convert or renovate existing properties into non‑owner‑occupied affordable rental housing. In this regard, China’s banking and financial institutions have already begun exploring related avenues. For example, the Industrial and Commercial Bank of China (ICBC) has launched a “Public Rental Housing” loan product, which, to date, has disbursed over RMB 15 billion in construction financing for public rental housing. In addition, ICBC has introduced a specialized “Commercial Rental Housing” financial product, focusing on supporting new rental‑housing projects in cities where demand is particularly strong. “The Opinions will further stimulate the enthusiasm of various market players to participate in the development and operation of rental housing, fostering more standardized and large‑scale growth among professional housing‑rental enterprises,” said a responsible official from ICBC’s Credit and Investment Management Department. Moving forward, ICBC will accelerate innovation, proactively address the diverse financing needs of affordable rental‑housing projects, and further refine its suite of rental‑housing loan products, offering comprehensive, end‑to‑end financial services. “For instance, ICBC‑Cinda Investment successfully issued China’s first provincial‑level talent‑apartment REITs product—the real estate investment trust—in 2019, pioneering innovative approaches to financial support for rental‑housing development,” the official added. “Beyond commercial finance, bolstering credit support for the development and operation of affordable rental housing also calls for fully leveraging the strengths of policy‑oriented finance,” noted Dong Ximiao, Chief Researcher at Zhaolian Finance and Part-time Researcher at the Fudan University Institute of Finance. On the one hand, commercial banks should adhere to the principle of commercial sustainability, developing medium- and long‑term loan products tailored to self‑holding entities and housing‑rental enterprises, thereby supporting both the development and construction of affordable rental housing and the renovation of existing properties. At the same time, they can provide integrated financial services—including rent collection and payment, liquidity management, and wealth‑management solutions—throughout project operations and subsequent phases. On the other hand, development and policy banks should respond to the specific credit needs of relevant stakeholders by extending long‑term loans at preferential interest rates to fund the development and construction of affordable rental housing.

The Measures for the Administration of Funds for Water Pollution Prevention and Control Have Been Issued.
Clarify the allocation of guiding funds under the horizontal ecological compensation mechanism for the entire Yangtze and Yellow River basins.
According to the Ministry of Finance’s website, the ministry recently formulated the Measures for the Administration of Funds for Water Pollution Prevention and Control (hereinafter referred to as the “Measures”), which clearly sets out support for six key areas of water pollution prevention and control, with the aim of standardizing and strengthening the management of such funds and enhancing the efficiency of fiscal resource utilization.
Water pollution prevention and control funds (hereinafter referred to as “prevention and control funds”) refer to funds allocated through the central general public budget, which are specifically designated to support water pollution prevention and control as well as the protection of the aquatic ecological environment.
Funding for prevention and control will prioritize six key areas of water pollution prevention and treatment, including watershed‑level water pollution management, ecological protection and restoration of watersheds, protection of centralized drinking water sources, groundwater ecological and environmental protection, capacity building for water pollution prevention and control oversight, and other matters requiring support.
According to the Measures, funds for pollution prevention and control are allocated through a combination of project‑based and factor‑based approaches, with expenditures directed toward water pollution prevention and control in key river basins, priority regions, and priority projects, as well as toward the establishment of horizontal ecological compensation mechanisms for the Yangtze River, the Yellow River, and other key river basins.
The allocation of guiding funds under the Yangtze River Basin-wide horizontal ecological compensation mechanism is based on water quality, water ecosystem restoration tasks, and contributions to water resources, with respective weights of 40%, 30%, and 30%. As for the Yellow River Basin-wide horizontal ecological compensation mechanism, the allocation factors and their corresponding weights shall be implemented in accordance with the relevant provisions set forth in the “Notice on Issuing the Pilot Implementation Plan for Supporting and Guiding the Establishment of a Horizontal Ecological Compensation Mechanism Across the Entire Yellow River Basin” (Cai Zi Huan [2020] No. 20).
To ensure that funds are used effectively, the Measures stipulate that no entity or individual may withhold, misappropriate, or divert funds earmarked for prevention and control. With respect to entities and individuals that violate national laws, administrative regulations, or relevant provisions, the competent authorities shall promptly intervene to stop and rectify such violations and, in strict accordance with applicable rules, hold them accountable. Furthermore, if financial and ecological‑environmental departments at all levels, as well as their staff, engage in conduct that contravenes these Measures, or otherwise abuse their authority, neglect their duties, or commit acts of favoritism and corruption, they shall be held liable in accordance with relevant regulations. Where such conduct constitutes a crime, criminal liability shall be pursued in accordance with the law.
The Supreme People’s Procuratorate has launched a 100-day intensive campaign to investigate judicial-related official crimes.
To focus on rectifying persistent and deep-rooted problems, removing corrupt elements, severely punishing official crimes committed by judicial personnel, and supporting the ongoing education and rectification campaign within the political and legal system, the Supreme People’s Procuratorate has decided to launch, from early June to late September, a nationwide “100-Day Intensive Campaign for Investigating Official Crimes Committed by Judicial Personnel” (hereinafter referred to as the “100-Day Campaign”) across all procuratorial organs.
Recently, the Supreme People’s Procuratorate issued the “Implementation Plan for the 100-Day Intensive Campaign on Investigating Official Crimes Committed by Judicial Personnel” (hereinafter referred to as the “Plan”), which clearly states that the guiding principle and overall objective of the campaign are to uphold Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully leverage the procuratorial organs’ role in combating judicial corruption and promoting judicial fairness, concentrate efforts on addressing persistent problems, and, focusing on issues of judicial injustice and corruption that have drawn strong public concern, strengthen the identification of leads, ensure seamless coordination among relevant agencies, intensify case-handling efforts, prioritize key cases, and launch a concentrated, targeted crackdown to investigate and prosecute a number of official crimes—such as abuse of power and bending the law for personal gain—committed by judicial personnel in the exercise of their official duties. The campaign aims to resolutely win this tough battle of self‑rectification and strict discipline, providing robust prosecutorial support for education and rectification, and contributing the procuratorial sector’s strength to purifying the ranks of political and legal personnel and enhancing public trust in the judiciary.
The Plan specifies that the “100-Day Intensive Campaign” will prioritize the investigation and prosecution of five categories of cases: first, cases assigned by the national and provincial-level offices for the education and rectification of political and legal personnel, as well as by the central supervisory teams; second, cases involving political and legal officers serving as “protective umbrellas” for criminal gangs and evil forces, referred by the National Anti-Black-and-Evil Forces Office and the provincial anti‑black-and‑evil offices; third, cases in which judicial staff abuse their authority or engage in favoritism and corruption to improperly grant sentence reductions, parole, or temporary release—issues underlying practices such as “paper imprisonment” and “buying one’s way out of prison”; fourth, major, difficult, and complex cases that have drawn strong public concern, attracted widespread social attention, and exerted a significant local impact; and fifth, high‑profile cases of official misconduct involving judicial personnel at the county‑level and above.
The “100-Day Intensive Campaign” will be carried out in three phases from early June to late September: First is the comprehensive review and verification phase, during which all outstanding leads and key cases involving alleged official crimes by judicial personnel are thoroughly reviewed and verified, laying the groundwork for the subsequent stage of chart‑based operations and case‑closure management. Second is the concentrated handling and攻坚 phase, in which procuratorates at both provincial and municipal levels implement chart‑based oversight, promptly convene analyses or conduct investigations to verify case leads, ensure that no lead is overlooked in the course of analysis and assessment, and efficiently and accurately assign and handle each matter—initiating criminal investigations where appropriate, closing non‑criminal matters without delay, and referring cases involving administrative, disciplinary, or Party‑discipline violations to the relevant authorities for disposition in accordance with applicable regulations. For major, difficult, complex cases, or those involving high‑ranking individuals and having significant social impact, higher‑level people’s procuratorates shall strengthen guidance and supervision to ensure effective outcomes. Third is the summary, consolidation, and enhancement phase, which involves a systematic review of all cases handled, an in-depth examination of persistent systemic problems in law enforcement and judicial practice to identify root causes, and efforts to improve long‑term mechanisms for checks and balances. A comprehensive assessment of the campaign’s implementation will be conducted, with particular attention paid to identifying gaps and vulnerabilities in the work process and to scrutinizing existing issues and shortcomings.
Since the launch of the education and rectification campaign targeting political and legal personnel, procuratorial organs have initiated investigations into a number of high-profile cases involving official crimes committed by judicial staff. For example, the Dalian Municipal People’s Procuratorate in Liaoning Province has opened an investigation into Li Li, a former inspector at the Dalian Municipal Public Security Bureau (at the deputy department‑level), on suspicion of bending the law for personal gain; similarly, the Wuhan Municipal People’s Procuratorate in Hubei Province has launched an investigation into Ye Weiping, a former member of the Party Leadership Group and Director of the Political Department of the Wuhan Intermediate People’s Court (who previously served as Director of the Enforcement Bureau), on suspicion of dereliction of duty in enforcing judgments and rulings (also at the deputy department‑level).

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